The Economic Value and Pricing of “Personalized and Precision” Medicine


By Tomas J. Philipson

DEFINITION: Personalized medicine, also referred to as precision medicine, is a medical model that separates people into different groups—with medical decisions, practices, interventions and/or products being tailored to the individual patient based on their predicted response or risk of disease


We discuss the economic value of personalized medicine and the optimal pricing of the combination products involved. We build on previous work of Egan and Philipson (2015) who stress a link between rational adherence in health care and the value of personalized medicine. Personalized medicine converts experience goods to search goods by speeding up the learning process relative to trial and error. This explains the emergence of personalized medicine in cancer care as well as the timing of this emergence. It also predicts greater innovation-and merger incentives from Disneyland style two-part pricing of the combination products.

Personalized Medicine - Personal Medicine - Medicine ...


Your thoughts are appreciated.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: